The Daily Pulse of Bursa Malaysia

Pecca’s amazing run is not about to end given continued car sales growth

Publish date: Thu, 14 Mar 2024, 08:47 AM
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Pecca Group Bhd has touched an all-time high of RM1.44 on March 13. The counter rose some 47.4% over the past year, having slid to a low of 87 sen last August. The heightened interest in the automotive upholstery maker is understandable riding on projected higher car sales, which are expected to rise to a new record of 725,000 units in 2023 from 720,658 in 2022.

Fundamentally, Pecca has been in a strong position. It posted record profit and revenue for the past three financial years and is likely to maintain its earnings momentum with another set of all-time high figures in FY2024.

The group expects to do even better than the previous year in FY2024, supported by a strong backlog of orders received from carmakers. In its latest quarter, Pecca reported another record-breaking financial quarter with both revenue and net profit at all-time highs.

Its net profit jumped 59.1% to RM13.38 million for the financial quarter ended Dec 31, 2023 (2QFY2024) from RM8.41 million a year ago. Its quarterly revenue increased by 21.1% year-on-year to RM64.76 million from RM53.48 billion.

The group attributed the increase in revenue to the demand for upholstery car seat covers, the sewing and supply of covers for car accessories, and wrapping and stitching services.

For the six-month period, Pecca’s net profit rose 57.5% to RM26.4 million from RM16.8 million. Its revenue increased by 18.9% to RM128.8 million from RM108.35 million.

Pecca anticipates the automotive industry to be buoyed by economic growth, improved supply chain conditions and sustained buying interest in new vehicles including electric vehicles. To cater to the anticipated production volume requirements, Pecca is in the midst of building its second manufacturing plant at the UMW High Value Manufacturing Park in Serendah, Selangor. The plant is expected to commence operations by mid-2025.

The capital expenditure for the new plant is RM45 million to RM50 million, of which RM8 million is for land acquisition, another RM10 million to RM15 million for the installation of machinery, and RM30 million for construction work.

Upon completion, the group’s annual capacity will double to between 400,000 and 480,000 seats. In addition, the company is looking to expand its market by venturing into the luxury car brands market.

Currently, Pecca installs leather upholstery car seat covers for Perodua, Proton, Mitsubishi, Toyota and Nissan. It looks like Pecca is driving towards another record year and will probably help boost its share price further.

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